Edit ModuleShow Tags

Why you don't need to fear a bear market

It's important to keep your cool


Published:

There’s no question, the market has been experiencing quite a ride since the start of 2016. Some economists estimate as much as $1 trillion has been lost due to market volatility so far this year. This bull market is currently being challenged by fears of recession, leaving many investors asking whether we are headed into a bear market (defined by a 20 percent drop).

With memories of 2008 looming for many investors, it’s human nature to want to avoid the same mistake twice. However, it is important to remain calm – especially if you are a U.S investor. The U.S. market hit an all-time high in May 2015 and, despite all the turmoil since then, the market is only about 10 percent lower; nowhere near the 20 percent that defines a bear market.

While the probability of a recession has risen, we are confident that the U.S. will avoid a bear market. In fact, we believe that the U.S. economy will not only withstand this global turmoil, it may keep growing until at least 2020. Consumer confidence is holding up, emphasizing the contrast between Wall Street and Main Street. Therefore, we recommend investors continue to consider U.S. equities as part of a diverse portfolio.

It’s also a good time to consider rebalancing your portfolio. Bond returns are broadly positive year to date. Investors with a shorter time horizon, or wishing to be tactical or opportunistic, may want to sell into rallies to raise cash. However, historically, staying in the market has rewarded investors more than timing the market. The key is to remove emotion from investing and stick to your long-term goals.

While global recession risks might have risen due to China’s slowing economy, falling energy prices and rising interest rates in United States, we strongly doubt that banks and U.S. financials in particular will again be the epicenter of the storm this time. The reality is, the market ebbs and flows. During this volatile time in the stock market, don’t panic. Instead, consult a professional to make sure you are making the right moves for your long-term financial success rather than making short-term decisions you may regret in the future.

Edit Module
Todd Hauer

Todd Hauer is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley Smith Barney in the Denver Tech Center. He can be reached at 720-488-2406 or toll free at 1-800-347-5099, or you can email him at Todd.Hauer@morganstanleysmithbarney.com.

Get more content like this: Subscribe to the magazine | Sign up for our Free e-newsletter

Edit ModuleShow Tags

Archive »Related Articles

Leading the Charge in Commercial Real Estate Innovation for 130 Years

NKF/ARA Newmark was ranked as the #1 Denver-Area Commercial Real Estate Brokerage by total sales volume in 2017

A New Take on Employee Wellness for Working Parents

Colorado businesses can provide a refreshing and new level of employee wellness benefits by investing in a family’s educational health.

What to Do When Everyone is Competing for Talent

Given our increasingly low unemployment rate and competitive environment for winning top talent, it’s critical you both find and keep the people best able to help you succeed.
Edit ModuleShow Tags
Edit ModuleEdit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags